[NERA site] …The Final CPP sets state-specific carbon dioxide emission targets based upon EPA’s calculations of the levels that EPA believes could be achieved in each state by implementing three types of changes, referred to as Building Blocks. The Building Blocks include EPA assumptions related to potential increases in the efficiency of existing units, re-dispatch to increase the utilization of existing natural gas combined cycle power plants, and increases in generation from renewable and new nuclear units. While not counted as a Building Block when setting the Final CPP limits for each state, EPA also allows for increases in end-use energy efficiency to be used for compliance purposes. Using NERA’s proprietary NewERA Model with baseline conditions and other inputs based primarily on US government information, the NERA team modeled the likely effects of state-by-state compliance with the Final CPP. This analysis presents NERA’s assessment of the potential energy market impacts and energy costs of the CPP, focusing on results over the period from 2022 through 2033. Results are prepared for two scenarios representing different assumptions on the availability of inter-state trading options, and a range of outcomes for these scenarios is presented based on two assumptions about the allocation of allowance value to electric local distribution companies (LDCs). The report finds that the EPA’s CPP rule would result in major changes in the US energy system and large overall energy system costs.

[NRDC Switchboard blog] America’s biggest polluters are behind another bogus study by NERA Economic Consulting that purports to show EPA’s Clean Power Plan will be a costly economic disaster. NERA reaches back into its old bag of tricks: ignoring the economic benefits of pollution reductions, overstating the costs of clean energy resources, and comparing cumulative costs to EPA’s annualized costs. In addition, NERA commits a severe accounting error by inappropriately counting allowance costs. As we’ve seen in the past, once these errors are corrected, NERA’s latest study only underscores that the costs of the Clean Power Plan are modest, and its benefits significantly outweigh the costs.

We’ll first examine the most egregious error in this report – NERA’s faulty accounting for allowance costs – and then look at the further ways NERA biases its findings.